Diageo cuts Cuervo ties

11 December, 2012

Diageo has terminated discussions with JB y Compania SA de CV and Lanceros SA de CV over the sale of Jose Cuervo tequila.

The breakdown in negotiations for the world’s largest tequila brand (3.9m 9-litre cases per year) has also ended the pair’s distribution agreement, effective June 2013.

Diageo currently markets and distributes the brand outside of Mexico.

With Jose Cuervo in transition to leave, the smaller Don Julio brand is now the sole tequila in Diageo’s portfolio.  

Paul Walsh, chief executive of Diageo said: “Diageo has had a long and successful relationship with the Cuervo brand and we are proud of what we have achieved for the brand as its distributor over many years.

“We believe that the future of the brand would be best delivered by aligning ownership of the brand with its route to market and I have no doubt that Diageo has the best route to market for this brand.

“However it has not been possible to agree a transaction which delivers value for Diageo’s shareholders and therefore, by mutual agreement, we have terminated our discussions.”

According to a statement, both parties will “now work to ensure the orderly termination of the current distribution agreement, including transitional arrangements”.





Comment

Menezes upbeat

Despite some gloomy reactions among city analysts to Diageo’s full year results to June 2015, chief executive Ivan Menezes was very upbeat at his briefing to journalists and city analysts in a top London restaurant today (July 30).

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